March 2, 2012 by MDOPKIN
In addition to the tax matters, there are general business and operational issues to consider. In Post 3 in this series, we’ll examine some non – tax considerations between the LLC and S Corporation.
One of the biggest differences between the LLC and S Corporation is the restrictions on the type and number of shareholders allowed by a S Corporation. S Corporations can have no more than one hundred shareholders, and none of those can be non – resident aliens. In addition, the shareholders are generally required to be individuals or certain types of trusts. LLC’s do not have these restrictions and offer more flexibility in terms of ownership.
An S Corporation is operated in the same way as a traditional corporation, and must follow the same formalities and record-keeping procedures. LLCs are generally easier to operate because they are not subject to the state law formalities corporations are required to follow.
Net – Net
We’ve seen through our examination of the differences and similarities of a LLC and an S Corporation that business owners can run into dramatic tax, operational and assorted other business issues if they choose unwisely on how to form their new venture. Don’t make that mistake when Dopkin Law Firm can guide and assist you along the way to greater success during the inception and growth of your organization. It’s what we do, every day.